As of the end of 2019, Alibaba has invested about USD 4 billion in Lazada.
According to iPrice’s latest statistics, Lazada is the e-commerce site with the most monthly active users in four countries in the region—Malaysia, Singapore, Thailand, and the Philippines. Founded in 2012, it claims to serve 50 million buyers on an annual basis, and is one of the most popular e-commerce platforms in the region.
KrASIA recently spoke with Magnus Ekbom, chief strategy officer and co-founder of Lazada Group. From 2012 to 2015, he served as CEO for Lazada Indonesia. In our interview, Ekbom offered his thoughts on e-commerce in Southeast Asia and why Lazada is in the race for the long run.
KrASIA (Kr): Let’s start with some fun facts about Lazada’s sale on December 12 last year. The farthest delivery was made in Indonesia, where a parcel traveled 5,533 km. In Singapore, enough RedMart paper towels were sold to encircle Singapore 13 times. In Malaysia, the first order was delivered in just 39 minutes. This was just one of the many mega-sale events that Lazada organized in 2019; many records were broken. What does this say about consumer sentiment in Southeast Asia?
Magnus Ekbom (ME):In 2012, Lazada brought the shopping festival concept to Southeast Asia, and it has spread across the region. This has enabled consumers to access fantastic deals. I think it has been a tremendous growth engine for many, many sellers. It has lowered the barriers for buyers who are trying to make online purchases for the first time. And it showcases the growth of the internet economy in Southeast Asia.
We are also very happy looking back at 2019. Our long-term strategy so far has resulted in Lazada being the fastest growing platform, with over 100% year-on-year order growth across four consecutive quarters last year. We made tremendous inroads in terms of releasing new products, product features, and consumer-facing technologies that enhance the experiences for our end-users.
We have also strengthened the sellers’ base on Lazada. For our November 11 event last year, 4,000 smaller sellers were able to each achieve USD 10,000 in sales in one day. That was really a great testament to the scalability of our platform and the growth potential for our sellers.
Kr: As part of Alibaba Group, does Lazada focus more on long-term strategies instead of “burning cash” to acquire consumers?
ME: Since 2016, we have been the flagship platform of Alibaba Group in Southeast Asia. Alibaba has over 20 years of experience in growing what is now one of the largest internet companies on the planet. Drawing from Alibaba’s experiences in China, the key learning point for Lazada is to have a relevant local strategy.
As part of Alibaba’s economy, we benefit tremendously from the technology, infrastructure, and know-how when it comes to payments (Alipay), scalability (AliCloud), and many other aspects. That is the distinct competitive advantage for Lazada not only today, but also in the long run.
Our focus is very, very straightforward. We want to continue to grow our users and buyers. Everything has to be done with a very long-term focus. Lazada is in Southeast Asia to stay. When we look at the region, we don’t talk so much about the size of the market. In many ways, that’s not our priority.
Kr: How would you define Lazada’s long-term goals?
ME: We look at what we need to do today in order to capture the opportunities that Southeast Asia will hold in 2025 or 2030—and on a longer horizon. That’s why we’re building the most scalable technologies in the world when it comes to e-commerce, powered by Alibaba’s existing ecosystem. We’re building and continuing to expand the largest logistics network in the region. We’re expanding payment infrastructure, catering to different needs in each market.
Lazada is in a unique position to lead and continue driving the e-commerce industry in this region. We believe—and this is also the view shared by many industry observes—that we have just scratched the surface of the potential that this region presents, as e-commerce penetration is at 3–5% of the retail sector at the moment.
It’s also very important to say that Southeast Asia is not just one region. In our case, it’s six distinct markets, and you need to understand each of them to be relevant to customers and buyers, and to serve sellers and brands in the best possible way.
Kr: You were CEO for Lazada in Indonesia, which is one of the most important markets in the region, and where there are very strong local players in the e-commerce space. As Southeast Asia’s e-commerce is now worth about USD 38 billion, what are your thoughts on tighter competition within the region’s e-commerce landscape?
ME: Indonesia is one of the most diverse countries in the world. In many ways, it also embodies Southeast Asia in a sense that it’s about being relevant in the local market’s context. There’s no such thing as a strategy for Southeast Asia, as each market has its own merit. Each of our markets is different—in terms of stages of development, levels of internet penetration, consumers’ preferences, users’ behaviours, the channels and platforms that they prefer, payment landscapes, logistics infrastructure, and so on.
When we look at a market, the starting point is always consumers. How can we be as relevant as possible to our consumers? Every day, shoppers make decisions about where they shop and what they buy, whether it’s fashion or necessities or products for the family.
Today, the biggest shift in retail in Southeast Asia is the shift from offline to online. That’s the opportunity that we are capturing. We have only seen the beginning of this transition. There are other players across the region that are also investing to acquire more users—overall, that’s good for the internet economy.
Kr: What are some of the things that Lazada is focusing on this year?
ME: We will continue to build on the fundamentals that empowered us during some very strong years. Our consumers will see new brands being offered to them and experience extremely reliable logistics services.
I think we remain optimistic about where the internet economy is heading. I believe that, in many ways, we have only seen the beginning of the growth of the e-commerce industry in Southeast Asia.
The interview has been edited for clarity and brevity.